Emergency Financial Management Planning

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Minchin LewisJanuary 15, 2016

Introduction:

Financial planning for local disasters seems like a contradiction. Dan Wears is the Commissioner of Emergency Management for Onondaga County in upstate New York. He doesn’t worry much about hurricanes and not too much about earthquakes. But he does worry. “When we are facing a major disaster, our first concern is to protect life and safety. We are not going to be immediately concerned about the finances.”

When is it time to worry about emergency finances?

While an emergency is unfolding, the complex world of financing emergency services takes a back seat. Money issues have to be resolved before disaster strikes, for several good reasons.

Interlocking resources of private and public agencies make it difficult to use finances while the community is exposed to a disaster, especially if the emergency manager has to search the Internet for emergency responders.

The scope of the disaster determines the financial impact and the level of financial preparation. Public disasters range from unfortunate events that impact a few households to catastrophic events that devastate whole communities.

In cases of hazardous materials, private interests will be receiving invoices for the costs incurred by public agencies in remediation of a destructive event.

The emergency nature of the subject does not diminish the financial reality. Nor does it diminish the responsibility of public officials to prepare for the unpredictable. Neither are individual citizens absolved from taking steps to minimize the impact of a disaster.

Who is responsible?

Responsibility for dealing with disasters escalates with the seriousness of the event. Lower level incidents are handled locally. In a case when local government is overwhelmed, the state responds with financial resources and, when necessary, with a workforce such as the National Guard.

Photo credit: FEMA

If the state is stretched beyond its resources, the governor can request a Major Disaster Declaration from the federal government. But there is a catch: the request must include a commitment to provide local and state resources toward the long-term recovery. The Federal Emergency Management Agency (FEMA) reviews the request and makes a recommendation to the president. The White House initiates federal action, or FEMA informs the requester of a denial.

The determination of the seriousness of an incident is based on assessments of the damage. Thresholds are established in the federal Stafford Act. Assessment begins at the local level and steps up, first to the state and then to FEMA. The process is described in detail by the Tennessee Emergency Management Agency.

How many Disaster Declarations have been issued?

Statistics from FEMA indicate that during the past 10 years, more than 1,400 requests have been approved. The declarations fell into roughly defined categories:

659 Fire disasters

289 Storms with flooding

181 Winter snow emergencies

85 Tornadoes

36 Hurricanes

These requests came from all 50 states, many territories and several tribal governments. Texas, California and Oklahoma led the list for risk of disasters. Annually, the Disaster Declarations have occurred at a high of 242 in 2011 with a low of 79 in 2015. No area is exempt from emergency financial management planning.

What are the resources for financial planning?

FEMA is the primary emergency financial management planning resource for both public and private sectors. Governments can utilize FEMA’s Pre-Disaster Mitigation programs for ideas to reduce the risk of natural hazards. FEMA’s National Incident Management System (NIMS) was developed so responders from different jurisdictions and disciplines can work together to respond effectively.

People with disabilities: specific plans for Americans with access and functional limitations

Measures by individuals can minimize damage and the resulting cost of recovery. The primary responsibility of individuals is to maintain adequate insurance coverage for personal and real property.

What are the financial stakes?

Even in cases when disaster aid is received through FEMA programs, local governments can be responsible for one-third of the cost. Emergency management plans should minimize that exposure by:

Assessing risks

Planning for recovery

Training responders

Educating the public

The plan should establish procedures for pre-incident alerts and warnings. Recovery activities in the plan can lead to restoring the community to its pre-emergency state and correcting the adverse conditions that contributed to the disaster.

Opportunities for Local Cooperation?

Pre-disaster mitigation projects will require local resources. They may also provide local benefits beyond waiting for a disaster to happen. Commissioner Wears points out, “Any mitigation project is inherently a community development project since it makes the community more resilient to the impacts of a hazard.”

Author: Minch Lewis is an adjunct professor at Syracuse University’s Maxwell School. He served as the elected city auditor in Syracuse, New York for nine years. He has developed financial management systems for the affordable housing industry. He earned his master’s degree in Public Administration at the Maxwell School. He is a Certified Government Financial Manager. He can be reached at [email protected].

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